Royal Bank of Scotland (RBS) has agreed a settlement with the UK and US regulatory authorities to settle allegations stemming from its role in fixing the global foreign exchange rates.

The 80 per cent state-owned bank has agreed to pay a fine of £217 million to City regulator the Financial Conduct Authority and a further $290 million (£182 million) to the US Commodity Futures Trading Commission to “resolve the investigations”.

RBS said the fines were covered by a £400 million provision booked in its third-quarter trading update.

The bank said: “As previously disclosed, RBS remains in discussions with other governmental and regulatory authorities on these issues, including the United States Department of Justice and certain other financial regulatory authorities.

“The timing and amounts of any further settlements and related litigation risks however remain uncertain and could be significant.”

The FCA has issued fines totalling £1.1 billion against five banks – RBS, HSBC, JPMorgan Chase and UBS AG – in what is the largest collective fine ever levied by the regulator.

A separate probe involving Barclays Bank is ongoing and Barclays said in a statement: “After discussions with other regulators and authorities, we have concluded that it is in the interests of the company to seek a more general coordinated settlement.”

All five banks fined by the FCA qualified for a 30 per cent discount for settling the claims at an early stage, and excluding the discount the fines would have totalled £1.59 billion.

The US regulator the Commodity Futures Trading Commission has also today agreed fines totalling more than $1.4 billion (£900 million) against the same five banks.

In its Final Notice statement outlining the findings of its investigation, the FCA said: “We found that between 1 January 2008 and 15 October 2013 the Banks did not exercise adequate and effective control over their G10 spot FX trading businesses.

“For example policies were high level and firm-wide in nature, there was insufficient training and guidance on how these policies applied to this business, oversight of G10 spot FX traders’ conduct was insufficient, and monitoring was not designed to identify the behaviours found in our investigation.

“The right values and culture were not sufficiently embedded in the Banks’ G10 spot FX businesses [daily rates] which resulted in those businesses acting in the Banks’ own interests without proper regard for the interests of their clients, other market participants or the wider UK financial system.

“Traders at different Banks formed tight knit groups in which information was shared about client activity, including using code names to identify clients without naming them.

“Traders shared the information obtained through these groups to help them work out their trading strategies.

“They then attempted to manipulate fix rates and trigger client “stop loss” orders (which are designed to limit the losses a client could face if exposed to adverse currency rate movements).

“This involved traders attempting to manipulate the relevant currency rate in the market, for example, to ensure that the rate at which the bank had agreed to sell a particular currency to its clients was higher than the average rate it had bought that currency for in the market.

“If successful, the bank would profit.”

RBS admitted wrongdoing on the part of some of its employees relating to:

- Attempts to manipulate the WM Reuters and the ECB fix rates, either alone or in collusion with traders from other firms, for RBS’s own benefit and to the potential detriment of certain of its clients and/or other market participants

- Attempts to trigger clients’ stop loss orders, for RBS’s own benefit and to the potential detriment of those clients and/or other market participants.

- Inappropriate sharing of confidential information with traders from other firms.

RBS chief executive Ross McEwan said: “We have insisted on a comprehensive investigation and an open and honest dialogue with the regulators.

“I am grateful to the FCA and the CFTC for recognising RBS’s cooperation throughout the process and the remediation work we have already undertaken in the Corporate & Institutional Banking division.

“RBS fully supports the industry-wide remediation programme announced today and will actively contribute to the important work of the Fair and Effective Markets Review.

“We will continue to take an open and cooperative approach with other global regulators as part of their investigations.”

RBS said six of its employees are currently in its disciplinary process, three of whom have been suspended pending further investigation.

The global foreign exchange market is a multi-trillion dollar daily traded market and around 40 per cent of the global trading in foreign currency takes place in the UK.

According to a 2011 report from the Global Policy Forum, less than one per cent of the daily market is linked to the trade of goods and services.

The bulk of foreign currency trading is done speculatively – meaning traders buy currency in the hope of selling it on at a profit.

A proposal to curb speculative currency trading, tabled by economist James Tobin – known as the Tobin Tax – was designed to penalise trading in which the primary purpose is extracting value.

The UK Government and the Mayor of London have consistently lobbied against the imposition of a similarly framed proposal, the Financial Transactions Tax, which the EU intends to impose in January 2016.

A report penned by Lord Grabiner QC, also published today, which looked into allegations the Bank of England was aware there were problems in the forex market going back as far as 2005, has found no evidence to suggest officials were involved in any unlawful or inappropriate behaviour.

However, Lord Grabiner's report found the Bank of England's chief forex dealer, Martin Mallett, had been aware dealers were sharing information about client orders going back as far as May 2008.

Lord Grabiner said Mallett did not inform an “appropriate person” of these issues, which he described as “an error of judgement”.

Mallet was suspended by the Bank of England in March of this year and dismissed yesterday (November 11) .

The Bank of England said Mallet's dismissal was not related to Lord Grabiner's investigation but “for serious misconduct relating to a failure to adhere to the Bank's internal policies”.